Landmark Links May 20th – The Great Divide

misaligned bridge

One Big Thing

The world’s largest real estate investors are sitting on an unprecedented pile of cash, preparing for distressed opportunities created by the pandemic.  However, the bid/ask spread between buyers and sellers is still massive.

In an environment like this, buyers are likely to be patient as they will want to be able to demonstrate to LPs that they got an exceptional deal if it closes before the dust settles.  No one want’s to hold a May or June 2020 asset on their books unless they can label it a distressed buy.

What I’m Reading

No Takers: Home goods retailer Pier 1 is winding down its business after not being able to find a buyer.  Get ready for some more empty retail space.

Perfectly Positioned: Green Street Advisors is betting that for the next two-to-three years, the single-family rental home sector will outpace multifamily in terms of rent, revenue and NOI growth.

In the Cross-Hairs: In its recently-released bi-annual Financial Stability Report, the Federal Reserve issued a grim warning that asset prices remain vulnerable to significant price declines should the pandemic take an unexpected course.  It called out commercial real estate in particular, saying that the prices were already high relative to fundamentals before the pandemic hit, pointing out that asset prices have risen faster than rents during the expansion.

No End in Sight: SoftBank’s earnings report released last week gave WeWork a valuation of $2.7 billion less than 6% of its peak “value” less than a year ago.

Failed Model: NY Magazine’s Josh Barrow has the best explanation that I’ve seen as to why delivery apps aren’t profitable:

I think the missing element for profitability is different: productivity. The hope with a lot of business models that bring app intermediation to a preexisting element of the economy like ride services or food delivery is that technology will make workers more productive. You can see instances where this is obviously true: a Peloton instructor who teaches a class to tens of thousands of people is more productive than a SoulCycle instructor who can only teach about 60 people at a time. But with a lot of apps, the promised boost to productivity never materializes. The worker still has to render personal service to one customer at a time, and the app doesn’t do much to reduce the worker’s downtime or help him or her complete the task faster. As such, the productivity boost that is needed to make the financial model pencil — paying the worker a high enough hourly rate while charging a fee the customer is willing to pay and still having a positive profit margin — does not materialize.

Chart of the Day

Your guess is as good as mine.

Source: Financial Times


Perfect Disguise: Two men wearing hollowed-out watermelon rinds on their heads stole alcohol from a Virginia convenience store, even posing for a picture before the heist.

Social Networking: Porn is booming during the pandemic, but it’s also becoming a lot more social, with things like cooking classes with models and fan subscription sites.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

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Landmark Links May 20th – The Great Divide

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